Founder takes the wheel to keep luxury auto group on track after crisis

08:01 AM CST on Friday, November 6, 2009

By TERRY BOX / The Dallas Morning News
tbox@dallasnews.com

Battered black boxing gloves rest on a corner of Scott Ginsburg's desk at Boardwalk Auto Group in Plano.

For now, the big battles at Boardwalk are over. Thirty months ago, the hard-nosed Ginsburg was forced to become chief executive of the luxury auto group after he fired his top manager and controller for what he says was theft from the dealerships.

Both have been indicted on charges of stealing thousands from the dealership and are awaiting trial, Ginsburg said.

Dallas has one of the largest luxury car markets in the U.S. and could emerge the leader. Scott Ginsburg, owner of Boardwalk Auto Group, is in the lap of luxury at Boardwalk Ferrari Maserati with a Lamborghini (center) and (from left) an Audi, Maserati, Ferrari, Porsche and Volkswagen.

Although Ginsburg considered selling his lucrative group on a couple of occasions, he says he has settled comfortably into the high-end auto business, where the sweet rasp of Ferrari V-8s and Lamborghini V-10s mingles with the scent of leather and money.

"My car collection is always visible," he said. "It's out on the lot."

On a recent afternoon, he walked among yellow Lamborghinis, red Audi S4s and silver Porsche convertibles as he discussed his rejuvenated business.

"You can spend so much time listening to offers" for the dealerships, said Ginsburg, who got into the car business after merging his Evergreen Media Corp. with Tom Hicks' Chancellor Broadcasting in the '90s and leaving as a multimillionaire.

"We decided to just buckle down and run these businesses," he said.

Since Boardwalk's original Porsche dealership opened in 1998, it has expanded dramatically to include Audi, Volkswagen, Lamborghini, Ferrari and Maserati franchises. In August, Ginsburg bought a Ferrari outlet in San Francisco – his first dealership outside North Texas – and he will open his third Volkswagen store in McKinney in a few weeks.

Meanwhile, work is proceeding on a new facility in Richardson for Lamborghini, which currently shares space with Audi at Boardwalk's original location on Plano Parkway just east of the Dallas North Tollway.

All of that is in addition to Ginsburg's other job: He's chief executive and chairman of the board at DG FastChannel Inc. in Irving, an 18-year-old publicly held company that provides digital technology for the electronic delivery of advertising, news releases and other content to various media.

"I usually go to Boardwalk in the morning," said Ginsburg, who begins his day with a workout that typically includes boxing – hence, the gloves on his desk. "Then at 1 p.m. or so, I go to the public company. I try to get home for dinner with my family, but after I spend some time with the kids and we get them to bed, I usually get on the computer and work."

He is well-acquainted with 16-hour days.

A native of Sioux City, Iowa, Ginsburg worked for U.S. Rep. John C. Culver and U.S. Sen. Dick Clark from 1971 to 1981. He served as staff director of two Senate subcommittees during the day and attended George Washington University and Georgetown University at night, earning bachelor and law degrees.

When he decided to assume direct control of his car dealerships, he knew he had to quickly become an expert on automotive retailing. That took some time, he said, but he came to understand and appreciate the intricacies of the various businesses at a dealership.

"It was a very complicated business to learn," Ginsburg said. "There were times when I was ready to say let's give up and toss it to the wind."

Although Scott Ginsburg considered selling Boardwalk Auto Group on a couple of occasions, he says he has settled comfortably into the high-end auto business. He says the group is profitable, but he didn't disclose specifics.

"If I hadn't gotten involved, the dealerships would have failed," said Ginsburg, 57, who founded the group in 1998 and had planned to remain mostly in the background as its primary investor. "Happily, the company has flourished."

As he began to actively oversee his dealerships, he was surprised to find few financial controls in place – "just some medallions [brand badges], some buildings and some people," he said. Inventory was not being managed properly. Dealership personnel were not communicating sufficiently with the lenders that financed the inventory.

That has changed. Now, he says, he's confident that he has the managers and processes in place to weather this economic storm.

As the economy turned, Ginsburg said, his dealerships moved to reduce their inventories, impose some serious cost discipline and get smaller.

"The bell rang last May or June, and you had to come out fighting or you would fail," he said. "We have faced a recession, we have faced a shift in management, we have faced building new facilities. I think we have met every challenge and come out of it fine."

Boardwalk is profitable, he said, though he declined to be specific. In general, his privately held dealerships strive to earn a profit of 3 percent to 4 percent of revenue, he said. The group has 325 employees.

"VW is on fire," Ginsburg said. "Audi is on fire. Ferrari is on fire. And Porsche is coming back around. We have been very fortunate to put this collection together."

Though the luxury and exotic segments of the auto industry have been beaten down as badly as mainstream cars – dropping 30 to 40 percent in the depths of the recession – high-end manufacturers are introducing several new vehicles such as the Porsche Panamera and Ferrari 458 that are likely to spark sales. Also, the stock market appears to be recovering.

"Clearly, those segments are not what they used to be," said Robert Ross, senior vice president and automobile editor at the Robb Report, a luxury lifestyle magazine based in California. "But there are still lots of guys for whom a Ferrari is as important as having a kidney."

Image-conscious Dallas has one of the largest luxury car markets in the U.S., and with the severe economic problems ripping through California and Florida, it could ultimately emerge as the nation's hot spot, said Drew Campbell, president of the New Car Dealers Association of Metropolitan Dallas.

"You may see other areas get like it was in the '80s, when no one would wear a Rolex because of what it implied," Campbell said. "We drive new cars here, and we love our new cars."

Ginsburg, who considers himself a businessman first and a car guy somewhere after that, is fairly satisfied with what he sees at his stores now and optimistic about the market's return.

"I just pinch myself every time I'm in one of our cars," he said. "Here I am with four kids, and I'm still the luckiest kid in the world."